Derek Syphrett

Frontier Oil Poised to Benefit from Strong Diesel Demand

Good Post - I read the FTO conference call last week and a couple things I would also mention here are:

1. FTO has more cash than debt ~300M cash vs. 150M debt

2. FTO has recently upgraded its facilities to produce better yields from crude - mgt was very proud of the ROC their going to get from these changes

3. FTO could be a takeout target for a cash rich strategic buyer like VLO, MRO or any of the Oil Sands E&P producers who crave integrated operations.

4. The sulfur extracted from sour crude is now a profit center because prices have increased from $10 per ton to $300 per ton. This isn't a big profit center but it was about 3.75% of operating income ($2M) in Q1 and if you adjust earnings for 1x issues the it would have been about 2% of operating income.